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Under same management: Some reservations about postal banking

March 2, 2014

MARK JAMISON

A recent report by the USPS Office of Inspector General on offering financial services at the post office won immediate support from Senator Elizabeth Warren, and postal banking was thrust into the limelight.  A big front-page story in Huffington Post entitled “Breaking the Banks” by Elizabeth Swanson offers polling data (and a poll of its own) that shows 44% of Americans favor letting the Postal Service getting into the banking business.  After the president’s State of the Union message, David Dayen, writing in the New Republic, suggested that President Obama use his executive powers to order the Postal Service to consider postal banking.  Dayan has another piece in Salon about how postal banking could even "save the economy."

While some news sites have been touting the idea as a way of saving the Postal Service, others have dismissed the idea as government overreach.  The division of opinion falls along fairly predictable ideological lines, with the Left largely in favor and the Right mostly opposed, although as recently as last August Reihan Salam of the conservative National Review was touting the idea of postal savings accounts.

As many of the news articles and op-ed pieces point out, postal banking is not a new or very original idea.  The old Post Office Department offered savings accounts up until the early 1960’s.  Japan’s largest savings bank operates out of the post office, and many other foreign postal systems offer some form of financial services or banking.

In several pieces here on Save the Post Office, I’ve suggested that the postal network would provide an excellent platform for limited banking services, like small savings accounts, check cashing, electronic bill presentment, and payment systems.  These services could bring the unbanked and the underbanked, as well as those with marginal or no access to the Internet, into the 21st-century economy.  In many ways those kinds of services are a natural fit with a postal network oriented to public service.  

Done properly, offering basic financial services through the postal network would be attractive and beneficial, not just to those at the bottom of the economic spectrum but also to many in the middle class as well.  An initiative like this could be a wise way to preserve and expand our existing postal assets while preserving hundreds of thousands of good postal jobs.

Considering that I myself have been a proponent of postal banking, I hate to throw a wet blanket on the idea.  The proposal has gained tremendous traction and gotten many people excited, but there are just too many reasons to be skeptical.  Given the current structure of the Postal Service, the mindset of its leadership, and the attitudes and expectations of politicians in both Congress and the Administration, a move towards postal banking would not only be unlikely to save the Postal Service and the postal network, but it could also turn out to be as abusive and harmful as the current landscape of payday lenders and predatory banks.  The last thing we need right now is for the Postal Service to try to balance its books by extracting billions of dollars in fees from some of the most financially vulnerable folks in society.  That’s not the way to save the post office.

Premature motion: PRC dismisses bid to view non-public Amazon docs

February 13, 2014

MARK JAMISON

Almost three months ago, I filed a request with the Postal Regulatory Commission seeking access to documents filed under seal in the docket that dealt with the Postal Service’s deal with Amazon to deliver its parcels on Sundays.  Last week, the PRC finally responded to the request. 

The Commission ruled that my motion was “dismissed without prejudice” as being “premature,” meaning I could resubmit the request again when the time was ripe — sometime next year.  I was also advised to confer with the Postal Service and Amazon "in an effort to resolve the request for access in a mutually agreeable fashion."  The Postal Service and Amazon had both filed briefs vehemently opposing my request, but somehow we were supposed to confer together and thereby "resolve the dispute without court action."  

This seems like a strange way to respond to a request for access to non-public documents, and the whole story illustrates the disturbing lack of transparency in how the Postal Service conducts its business — and with PRC approval to boot. 

The Senate puts the PRC in the backseat — or maybe not even in the car

February 9, 2014

BY MARK JAMISON

On Thursday of this past week, the Senate held the second of two markup sessions on the postal reform bill, a.k.a. the manager’s or substitute amendment, submitted by Senators Carper and Coburn.  At the first session held the previous week, on January 29, a controversy arose over Section 301 of the proposed bill, which deals with postal rates and the role of the Postal Regulatory Commission.  The controversy resumed on Thursday.  

As originally proposed in the manager’s amendment, Section 301 does several things.  First, it takes the exigent rate increase that the PRC approved on a temporary basis and makes it the new base line.  The bill thus essentially overturns the PRC’s ruling in December and makes the 4.3 percent increase permanent, rather than limiting it to the time frame required to bring in $2.8 billion in profit (about 18 months to two years).

Section 301 also raises the current limit on annual rate increases from the CPI to the CPI plus one percent.  That would all but guarantee higher annual rate increases over the next few years.

In addition to dealing with these two specific rate matters, Section 301 transfers much of the responsibility for setting postal rates in the future from the PRC to the Postal Board of Governors.  The PRC’s role would be reduced to reviewing the BOG’s decision after the fact, rather than approving increases before they’re implemented. 

Finally, Section 301 gives the BOG the primary role in a 2017 rewrite of the ratemaking system.  The PRC can have some input and it will be able to veto the revision, but that's about all.

As Senator Carper explained at Thursday's markup, he and Senator Coburn decided to give the PRC "a very minimal role in terms of actually deciding what that new rate structure would look like" in the 2017 rewrite.  "We really put the Postal Service in the driver’s seat.  I don’t even know if the PRC was in the car, but certainly the Postal Service was in the driver’s seat.”  (video at 2:03:40)

Can it get much worse? The Senate tries postal reform, again

February 3, 2014

BY MARK JAMISON

The Senate Committee on Homeland Security and Government Affairs finally took up its postal reform bill at a markup session on Wednesday, January 29.  The new S.1486 the committee took up is significantly different from the Carper-Coburn bill released last August.  The current version, aka the substitute bill or the managers’ amendment, has introduced changes to the rate system, regulatory oversight, and facility closings that are worth close scrutiny.

The leadership of the Postal Service has expressed satisfaction with the new substitute bill.  No wonder.  It reads like the fulfillment of PMG Donahoe’s and the Board of Governor’s wish list.  It grants them new powers over ratemaking, adds language regarding contract negotiations favorable to management, and creates a separate postal employee health plan within the current Federal Employee Health Benefit Plan (FEHBP).  The bill also addresses the retiree health benefit prefunding, while adding a new prefunding requirement for workman’s compensation.

Whatever its final form, the postal reform bill that comes out of the Senate will represent the next step in a process that has been going on since the Postal Service was created in 1971.  For the last forty years the leadership of the Postal Service has pursued a course that treats the postal network in terms of a corporate business model that simply provides a delivery service.  Postal leaders do not seem much interested in the view of the postal system as basic national infrastructure that connects American homes and businesses with each other and with their government.  They do not seem very committed to a broad vision of the universal service obligation.  They do not seem to understand what our Founders grasped so clearly — the important role of the postal network as a fundamental element of democracy, furthering access to information and creating connections in a way that bound the nation together.  

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On Privatization

Good Reading on Postal Privatization

Also: Sarah Ryan's "Understanding Postal Privatization: Corporations, Unions, and the "Public Interest"


 

Privatization in the UK

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Organizing to Save Rural Post Offices


A Community Organizing Toolkit

Revised November 2012

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